The rises come off the back of a Christmas trading period that was ‘devastated’ by Omicron in a sector already in debt and low on cash reserves. Businesses reported an average increase of 19% in labour costs, 17% in food prices and 14% drinks prices.
Over 80% of operators who were surveyed said they had experienced either moderate (39%) or severe (42%) levels of cancellations since the start of the year.
Kate Nicholls, chief executive of UKHospitality, said: “Omicron has infected the start of 2022 with lower-than-expected trading levels and higher than expected cancellations in hospitality venues.
“One in three businesses in our sector have no cash reserves left and are already carrying heavy debt burdens. Many of our community pubs, restaurants, hotels and hospitality venues will therefore fail as the cost-of-living crisis bites, causing demand to faulter. This can only cause the UK’s wider economic recovery to stutter.
“This April’s planned increases in VAT, employment costs and business rates are therefore likely to prove one financial burden too many for businesses who only then, as we come out of the quieter winter trading period, can hope to begin to start trading at full capacity once more.
“The industry wants to play its full part in the UK’s recovery from the pandemic but, as these latest figures highlight, we can only do that with further support from the Government - support that must include keeping VAT at 12.5% permanently.”